The U.S. dollar rebounded against the euro on Wednesday after the European Central Bank reiterated its dovish stance on monetary policy, though weaker-than-expected U.S. economic data limited the dollar's advance.
The European Central Bank has no plans to curb or curtail its money-printing program, although it expects the euro zone economic recovery to broaden and strengthen. ECB President Mario Draghi said he was surprised at speculation about exiting the program early since it was only a month old.
The comments were "negative for the euro because Draghi reaffirmed the QE (quantitative easing) program, despite some talk that the ECB might need to curb it in reaction to stronger data," said Vassili Serebriakov, currency strategist at BNP Paribas in New York.
The ECB's asset-buying program of 60 billion euros a month of new money, which the central bank started last month, has a weakening effect on the euro.
The euro pared losses, however, and the dollar slipped against the Japanese yen, after data showed U.S. industrial output fell 0.6 percent in March, more than an expected drop of 0.3 percent.
The data followed an earlier reading on Wednesday showing manufacturing activity growth in New York State unexpectedly contracted in April, weakening for a third straight month as the pace of new orders fell to a multi-year low, according to the New York Fed's Empire State general business conditions index.
The selling pressure on the dollar was limited as traders maintained the view that the Federal Reserve would hike rates this year despite the weaker data. A rate hike from the Fed is expected to drive the dollar higher by boosting investment flows into the United States.
"The data hasn't been weak enough for long enough for expectations that a Fed hike is in the cards to change, so any dollar weakness is being bought into," said Douglas Borthwick, managing director at Chapdelaine Foreign Exchange in New York.
The euro was last down 0.52 percent against the dollar at $1.06010, but above a session low of $1.05710. The dollar was last down 0.04 percent against the yen at 199.355 yen and was down 0.01 percent against the Swiss franc at 0.97220 franc.
The dollar index, which measures the greenback against a basket of six major currencies, was last up 0.29 percent at 99.021.
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